U.S. to File WTO Case Against China Over Cars

Keith Bradsher|The New York Times

Monday, 17 Sep 2012 | 2:03 AM ETThe New York Times

SHARES

The Obama administration plans to file a broad trade case at the World Trade Organization in Geneva on Monday accusing China of unfairly subsidizing its exports of autos and auto parts, a senior administration official said late Sunday, in a move with clear political implications for the presidential elections less than two months away.

Per-Anders Pettersson | Getty Images

World Bank building in Washington, DC.

The W.T.O. case accuses China of providing at least $1 billion worth of subsidies from 2009 to 2011 for exports of autos and auto parts. While China exports virtually no fully assembled cars to the United States, it has rapidly expanded exports to developing countries, and those exports compete to some extent with cars exported or designed in the United States.

President Obama plans to announce the move on Monday during a visit to Ohio, one of the most important of the battleground states and a place where the president is trying to capitalize on his bailout of the auto industry. A poll by NBC News, The Wall Street Journal and Marist College last week showed Mr. Obama building a significant lead in Ohio.

The upper Midwestern states have emerged as a key battleground in the presidential election, particularly Ohio, which has rivaled Florida in recent presidential elections as the most hard-fought state of all. Ohio is also the hub of the American auto parts industry, which has suffered heavily from job losses that have coincided with surging imports of auto parts from China.

Auto parts employment in the United States has dropped by about one-half from 2001 to 2010, as imports from China grew nearly sevenfold over the same period, according to data provided by the senior official, who insisted on anonymity citing an administration policy banning on-the-record comments on a new policy before an official announcement is made. Auto parts manufacturers directly employ 54,200 people in Ohio, and when suppliers like steel makers are included, the auto industry accounts for 850,000 jobs in the state, or 12.4 percent of total employment there.

But auto industry experts debate the extent to which those imports have been directly responsible for the closing of factories and for cutbacks at other plants, as ever-increasing automation has also played some role. The slowing of the American auto market since 2008 has had an effect as well, although auto sales have begun to recover in recent months.

Mitt Romney, the Republican presidential nominee, has repeatedly accused the Obama administration of not doing enough to challenge China on trade and currency policies. But the timing of the administration case, coming so soon before the elections, makes it likely that the Chinese government will accuse President Obama of playing politics — an accusation already made by Chinese officials, particularly those with close ties to affected industries, in connection with recent trade cases involving solar panels.

Asked whether the trade cases against China were timed for political impact, the senior administration official replied by e-mail that “President Obama has prioritized enforcement of Americans’ rights in the global trading system from day one, and this administration has a consistent record of action to support American jobs.”

The press office at China’s commerce ministry had no comment when told by telephone on Monday morning of the planned trade case, asking for a fax of questions, which did not yield an immediate reply. Chinese officials have denied in general that they subsidize exports.

Chinese exports have surged particularly in the past year, as the Chinese economy has slowed sharply, leaving particularly the domestic Chinese automakers with huge inventories of unsold cars that they are seeking to sell overseas.

Speakers repeatedly mentioned during the Democratic convention the federal government bailout for the Detroit auto industry three years ago, following a perception that the bailout will prove politically advantageous in key states. By contrast, speakers during the Republican convention generally avoided the subject.

The administration also plans to take further legal steps on Monday in a W.T.O. case already pending against China over its imposition of steep anti-dumping duties last winter against more than 80 percent of American car exports to China. That case, described by people in China as largely the result of factional rivalries in Beijing that produced a need to take a strong stand against the United States, has begun to shift the focus of trade tensions between the United States and China toward the automotive sector.

The administration has been mulling a possible W.T.O case against China in the auto sector since at least last winter, and has been encouraged by unions to do so, particularly the United Steel Workers.

Options Action

The Reserve Bank of Australia indicates that it could put rates on hold for the time being and will only opt for further rate cuts, if necessary, says Sean Callow, senior currency strategist at Westpac.